Economic uncertainty is a good reason to go over your finances and tighten your belt. But, in times like these, insurance remains essential.

So, how do you prepare for tougher times but still make sure you’re covered?

Here are a few insurance tips for a tough economy:

1. Make Sure You Have Adequate Coverage

Many insurance clients get a nasty surprise when it turns out that the policy they’ve been paying for doesn’t cover a claim.

Much of this can be attributed to not getting a thorough understanding of the ins and outs of your plan.

Rather than assuming that your household content insurance covers floods and fire, go over its terms to make sure that it does.

Many policies require you to take out supplementary plans to ensure full coverage. For example, household contents coverage often doesn’t cover items lost or stolen while on your person.

Car insurance plans often only cover accidents and theft, but not vandalism or damage from protest action.

Expanding your coverage could raise your premiums, but could also be your saving grace in the event of a large claim.

2. Don’t Underinsure Yourself

To lower your premiums, you might be tempted to underinsure yourself. Some clients do this by understating the value of their assets.

This can easily come back to bite you. While you shouldn’t over-insure yourself, underinsuring can result in you receiving only a fraction of what you need.

Therefore, valuing your home at only R1-million when it is actually R2-million (excluding the land value), might mean you end up with a claim payout of only R800 000. This means you will fall well under what you need in the event of a disaster.

In the long term, underinsuring your assets will cost you a lot more than the money you saved on lower premiums.